There is a substantial body of evidence that the organic fraction of low rank coal (LRC) is chemically transformed by wood-rot fungi. These fungi and the oxidases they secrete have variously been shown to solubilise, polymerise, depolymerise and decolourise macromolecules derived from LRC. The white-rot fungus, Phanerochaete chrysosporium, is able to depolymerise and decolourise alkali-soluble acid-precipitable LRC macromolecules (AS-coal), converting them to a form not recoverable by alkali washing. Transformation of AS-coal is enhanced in N-limiting media under hyperbaric oxygen and is believed to be due, at least in part, to oxidation by manganese peroxidase (MnP) and lignin peroxidase (LIP). The precise role these enzymes play is not yet clear but enzyme and mutant studies show AS-coal can be both polymerised and depolymerised by MnP and its mimetic Mn(III), without change to its absorbance at 400 nm. LiP decolourises AS-coal without apparently altering its molecular mass. Culture filtrates containing MnP and LIP acting on methylated AS-coal yield an array of low molecular mass moieties. Coal-derived monomers have not been recovered from cultures of P. chrysosporium, consistent with them being taken-up by the fungal cells. This suggests that cellular transformations may permit the diverse catabolic products derived from LRC to be converted to specific low molecular mass compounds in usable yield.